Estonia Becomes 17th Eurozone Member

Woman shows a 20 euro banknote during New Year Eve celebration in Tallinn 01 January 2011. Photo by EPA/BGNES

Estonia became on January 1 the 17th member of the eurozone and the first former Soviet state to embrace the EU single currency.

The changeover from the kroon to the euro started at midnight (2200 GMT) in the small Baltic nation of 1.3m people.

Prime Minister Andrus Ansip marked the event by withdrawing euros from a cashpoint.

"It is a small step for the eurozone and a big step for Estonia," he said, holding the euro notes.

Kroons will be used in parallel with the euro for the first half of January. Banks will swap Estonians' kroons for euros until the end of 2011 and the central bank will carry on doing so indefinitely.

The kroon has been pegged to foreign currencies from the start, first to the deutschmark and, in 2002, to the euro.

The rate of 15.65 kroons to one euro has never changed.

Even though the government is enthusiastic about the euro adoption and says it will attract foreign investors because devaluation is then ruled out, poorer Estonians fear a hike in prices as calculations may be rounded up.

Estonia joined the EU in 2004 - one of eight former Communist countries that did so, including its Baltic neighbours Latvia and Lithuania.

Two other ex-Communist countries - Slovenia and Slovakia - are already in the eurozone.

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